SteveKo

I'm new to leasing so trying to learn as much as I can. I spoke to one dealer who told me that Audi uses the vehicle purchase price and then subtracts the residual value (currently 51%) then adds in interest to determine the cost amount to use in the lease..
Is the interest rate used in the lease set by Audi? Basically does Audi sets the interest rate and residual values or does each dealership do their own? What's the down side to a lease? Is it just the interest rate you pay on the lease? Is that rate usually higher than just
the 5% you would pay financing the car? Trying to understand if I finance the car and after 3 years I wanted to trade it in.. Would the trade in be higher than the residual value given the miles stayed within the lease amount? Sorry if this sounds confused but it's coming from me
who is in fact a bit confused. Thanks!

SCarGuy

Steve,

Audi sets Residual based on term, and mileage (and whether AudiCare is in the deal or not, boosts residual by 1%

Interest is set ultimately by the dealer, based on a base rate set by Audi. Let's a dealer make some profit on the back end of a deal, for a generous discount on the front end of a deal. Ultimately, base rate is set by Audi., based on credit, income, debt to income ratio.....ie, that info per the credit application assigns you to a Tier, and that Tier determines the base rate.

Rates vary car to car - cars in demand (Q8, example in your case), or specialty models (RS anything) have higher rates than cars that are consistent movers with more competition (aka Q5, SQ5, A4, S4).

Plus and minus to lease same as plus to minus on a purchase. I've personally done both extensively. Neither is better nor worse in sum...it is all about what works better or worse for your tastes, your situation. I like having a new car, I like changing things up. I prefer a lease in that regard as it gives me the greatest flexibility. Leasing a car over and over time after time ultimately costs a bit more than buying the car and financing it for a typical term. But, I drive too much, so that is a factor too (though it's not my only car)..so a lease is usually not always a practical choice for me. I've paid cash, financed, and leased, extensively. 35 cars to date, 9 of them new Audi's.

Typically, in recent years (the last 4-5 ish) the residual value Audi assigns in a lease is a little higher than the actual market value of the car at the end of the lease....every brand does it, as it drives sales consistently. But the brands insure themselves against any GAP (same as you might have GAP insurance on a finance). In that regards, actual depreciation is not your issue in a lease, it's Audi's. Just like if the car is in a fender bender. That hurts value if you own the car. Has zero affect if you lease the car. A typical finance takes far more money down to net the same payment as a typical lease....which brings you into the thought of the "capacity" of your dollars now, vs their future value if you put them someplace else for the lease term. There can also be tax benefits of one vs another, again, depending on your particular situation. If mileage at the end of the lease is significantly lower than contracted mileage, it might pay to buy the car post lease (you buy it for the residual). That's how I came to own my "beater" A4...leased it new, was WAY under mileage, so the buyout made total sense. Bought it, and I will keep it till she finally calls it quits (159k and counting)

Feel free to give me a call if you want to discuss, you've got my info.

Jsf721

Go to leasehacker and read. Do not start multiple posts like you did here or they will merge them or lock them. Just ask everything in one post.

SteveKo

Thanks Adam.. !

Jsf721: Not sure what you mean? I started a post to learn about leases.? Only posted this one thread about it.? I'll check out the lease hacker forum. Thanks for that forum.